IMF chief warns of 'lost decade'

The head of the IMF pleaded with China to support the eurozone as she warned the global economy is heading for a "lost decade".

Speaking at a conference in Beijing, Christine Lagarde said although the measures already taken to solve the debt crisis were positive, more needed to be done to lift confidence, the BBC reported.

"Our sense is that if we do not act boldly and if we do not act together, the economy around the world runs the risk of downward spiral of uncertainty, financial instability and potential collapse of global demand," she said.

"We could run the risk of what some commentators are already calling the lost decade."

The warning comes a day after Italy's cost of borrowing hit the highest level since the euro was founded in 1999. Yields on Italian 10-year government bonds rose to 6.77%, raising concerns Italy may have to be bailed out just like Greece, Ireland and Portugal. Italian prime minister Silvio Berlusconi offered to resign after parliament passes the austerity package required by the EU.